Microsoft denies f..... comment by Gates

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Former Microsoft executive Kai-Fu Lee has accused the software
giant of incompetence in its plans to gain a business footing in
China, and testified that an expletive-filled tirade from chairman
Bill Gates was a low point before he defected to rival Google.

In testimony during a hearing on Microsoft's lawsuit against Lee
and Google, Lee said on Tuesday he wrote a memo to another
Microsoft executive saying he was "deeply disappointed at our
incompetence in China - that we have wasted so many years in
China with little to show for it."

Lee went on to say in the email that he was embarrassed by
Microsoft's business practices and that people in the government
joked about Microsoft's internal politics. But he didn't provide
any details in his testimony on Tuesday about what exactly
frustrated the Chinese government.

He testified that one of the lowest moments of his career with
Microsoft was a conversation in which Gates yelled at him and said
the company had been "f-----" by the Chinese people and its
government. Lee did not clarify the context of Gates' comments.

Lee also complained that Microsoft had more than 20 business
groups operating virtually autonomously in China, with little
cohesion.

Among other problems, Lee said, was a commitment Microsoft chief
executive Steve Ballmer made in 2002 to outsource $US100 million
($A130 million) in jobs to China. Within the last year, after
it had become clear that they weren't fulfilling this promise, Lee
said he was put in charge of outsourcing jobs to China.

Microsoft spokeswoman Stacy Drake said Gates did not make such a
statement.

"Bill Gates adamantly denies ever making such a comment. This is
another attempt to deflect interest from the real issues in this
case," she said.

Google spokesman Steve Langdon said he did not know the context
or date of Gates' alleged comments. He said neither Lee nor Lee's
attorney was immediately available to comment after court.

Lee, who worked at Microsoft from 2000, joined Google in July to
lead the company's expansion into China.

Redmond-based Microsoft has sued Google and Lee, who is known
for his work on computer recognition of language, a key problem in
search technology. Microsoft contends that Lee's duties would
violate the terms of an agreement he signed as part of his
Microsoft employment contract. Microsoft also accused Lee of using
insider information to get his job at Google.

Google denies the allegations and has counter-sued
Microsoft.

Microsoft attorneys sought Tuesday's hearing before King County
Superior Court Judge Steven Gonzalez to restrict what work Lee
could do for Google until the lawsuit goes to trial in January.

In approaching Google about a job, Lee sent an email stating, "I
am currently the corporate vice-president at Microsoft working on
areas very related to Google," said Microsoft lawyer Jeff
Johnson.

"He was saying, 'Look what I did at Microsoft and look what I
can do for you,'" Johnson said Monday at a hearing before King
County superior sourt judge Steven Gonzalez.

Attorneys for Google said in court on Tuesday that much of what
Lee knew about the Chinese market came from his previous work
experience at Apple Computer and other companies, and that
Microsoft was exaggerating the extent of his work for Microsoft on
China.

Johnson alleged that Lee - while still on Microsoft's
payroll - went so far as to send Google a paper he had written
for Microsoft about the Chinese market and that he also made
recommendations to Google about other people the company might want
to employ.

John Keker, a lawyer for Google, argued that recruiting was not
a violation of the agreement because it specified only that Lee
could not take part in activities that were competitive with
products, services or projects he worked on at Microsoft.

The case has illuminated the behind-the-scenes bitterness
between the two rivals. Court documents released last week said
Microsoft chief executive Steve Ballmer, in an obscenity-laced
tirade over another employee having been hired away by the search
company, threw a chair and vowed to "kill" Google .

Ballmer called the characterisation of his response a "gross
exaggeration."